Not only is Hong Kong a key gateway to mainland China for the food, beverage, cosmetic and a whole range of consumer goods industries, the city has been crowned the world’s most competitive economy, unseating the three-year incumbent United States, according to the Institute for Management Development (IMD) World Competitiveness Center, a research group of Swiss-based IMD business school.
Professor Arturo Bris, the Centre’s director, said in late June that Hong Kong’s resilience to the Chinese mainland’s slowdown had got it over the line this year. Hong Kong wrested the competitiveness title from the world’s-largest economy, while bucking the trend of an overall regional decline.
Despite Hong Kong being the Asian economy most dependent politically on the mainland, “it has been the most resilient to the growth problems and volatility issues in the Chinese mainland this year,” said Professor Bris. “I think that the city’s monetary and fiscal policies, the diversification of the economy, that it is not a manufacturing country and that, in fact, it is a small economy, all play a role in isolating Hong Kong from the crises in Asia.”
The IMD World Competitiveness Center has published the ranking each year since 1989. Widely regarded as a leading global assessment, it benchmarks the performance of 61 economies based on more than 340 criteria measuring different facets of competitiveness.
Responses from an in-depth survey of more than 5,400 business executives, who are asked to assess the situation in their own economies, were also taken into consideration to determine the overall rankings.
The IMD’s World Competitiveness Yearbook 2016, published last month, ranks Hong Kong first, followed by Switzerland and the US, with Singapore, Sweden, Denmark, Ireland, the Netherlands, Norway and Canada completing the top 10.
Professor Bris said a consistent commitment to a favourable business environment was central to Hong Kong’s steady rise in the ranking from second place in 2015, and fourth in 2014.
“The US still boasts the best economic performance in the world, but there are many other factors that we take into account when assessing competitiveness,” he said. The “common pattern” among all of the countries in the top 20, Professor Bris added, is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions.
A leading banking and financial centre, Hong Kong encourages innovation through low and simple taxation and imposes no restrictions on capital flows into or out of the city, the report noted.
Professor Bris paid tribute to Hong Kong’s business-friendly regulatory system. “The role of the government is to facilitate enterprising, job creation by the private sector and innovation,” he said. “A good regulation is one that does not interfere much with the private sector and provides a legal infrastructure that reduces uncertainties and favours competition.”
He also cited Hong Kong’s key role as gateway to the mainland. While Hong Kong “certainly” has an unrivalled edge in terms of regional competitiveness, “it is also true that Hong Kong, unlike Taiwan and South Korea, for instance, has proactively executed this strategy of becoming the finance provider for mainland China.”